Making a Case for Real Estate Agent Insurance
One of the reasons why it’s so important that real estate professionals keep their coverage current is that policies are issued on “claims-made” basis, which means that claims must be reported during the policy period. That period ends when a policy is cancelled or by allowing it to expire.
In addition, switching companies at renewal does not result in the loss of prior acts coverage, as long as the switch is completed before the policy expires and the new company provides coverage under a real estate agent insurance policy for prior acts. This may vary from insurer to insurer, so it pays to do the research. For example, if you switch to one that does not have prior acts coverage, you could be running the risk of not having coverage for an older claim when you need it. Most agents and brokers realize that there are times when a claim may take a year or two before it surfaces, which is why keeping prior acts coverage is so vital.
Many agents carry their own Errors & Omissions (E&O) policy
Often real estate agents have their own E&O policy even if the broker they work for has a company plan. In this way, regardless of any circumstances surrounding the broker’s policy, the agent always has control over their own individual coverage and therefore can make sure to keep it current. Most individual premiums are priced low enough to make this a smart decision on their part.
The fact is that real estate agents, brokers and appraisers nowadays end up in court more than ever, regardless of how careful they might be. It would be a big mistake to allow your coverage for past work to lapse. Unfortunately, many homeowners are filing a large number of complaints, often ill conceived, due to emotional responses to any dramatic loss in equity.
Regardless of whether there is actual fault, agents can end up spending unwarranted time and resources providing for defense of a lawsuit, even if they have done no wrong. This is the best argument for keeping your prior acts coverage, as not having this feature can really cost you should a problem arise from the past.
Finally, remember that most insurance policies require you to report claims and incidences in a timely manner. Otherwise, a carrier may refuse coverage if they feel the delay in reporting hurts any defense.